The Neral–Matheran Light Railway was built between 1901 and 1907 by Abdul Hussein Adamjee Peerbhoy and financed by his father, Sir Adamjee Peerbhoy, at a cost of Rupees 16,00,000.[1] Adamjee Peerbhoy visited Matheran often, and wanted to build a railway to make it easier to get there. Hussain's plans for the Matheran Hill Railway were formulated in 1900, and construction began in 1904. The consulting engineer was Everard Calthrop. The line was open to traffic by 1907. Its tracks were originally 30 lb/yd (14.9 kg/m) rails, but were upgraded to 42 lb/yd (20.8 kg/m) rails. The ruling gradient is 1:20 (five percent), with tight curves, and speed is limited to 12 km/h (7.5 mph).

The railway was closed because of flood damage in 2005 and was not expected to reopen before April 2007.[2] However, the first run on the repaired railway was on 5 March 2007.[3] The line observed its centenary on 15 April of that year. Service had been suspended during the monsoon season (from June to October)[4] because of the danger of landslides. During the 2012 monsoon season, Central Railway (CR) tested the railway's air brakes and, after approval from the Commission of Railway Safety, ran the train during the monsoon for the first time.[5] CR planned to shorten the monsoon service suspension to 15 July – 1 October.[6]

In November 2012, CR added a special coach (known as a saloon) to trains operating on the line. The saloons have sofas and LCD screens showing images from outside the train. The saloons had been available only to railway officers.[7][8]